BSP: 150-bps rate cut 'too aggressive'

Cutting borrowing costs by 150 basis points in two years is possible, but it will be too aggressive” based on the economy’s current growth trajectory, according to Bangko Sentral ng Pilipinas BSP) Governor Eli Remolona Jr.

-  KEISHA TA-ASAN

In a forum hosted by the Tuesday Club at the EDSA Shangri-La Hotel, Remolona said it is possible for the central bank's Monetary Board to cut rates by 50 basis points this year and 100 basis points in 2025.

However, Remolona said the economy may have to experience a hard landing or a rapid decline in economic growth first before monetary authorities cut the key interest rate from the current 6.50-percent level.

"In taming inflation, we don't want unnecessary loss of output," he said. "Sometimes we can't avoid a small loss of output because our calculations are not accurate. But if it seems like a big loss, we have to react to it."

Asked for comment, Finance Secretary Ralph Recto told The STAR that the views of the BSP governor would guide the Monetary Board's plans moving forward.